3 Wine Stocks on LSE to Watch for: Naked Wines, Stock Spirits Group, Diageo

4 min read | June 12, 2021 12:55 AM AEST | By Kamalika Ghosh

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3 Wine Stocks on LSE to Watch for: Naked Wines, Stock Spirits Group, Diageo — Image source: Africa Studio, Shutterstock

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Summary

With the reopening of the economy and opening of hospitality venues across the UK, the demand for wine is expected to recover soon.

Globally, the size of the wine market is growing continuously and expected to reach $444.93 billion by 2027.

Wine has always been one of the popular drinks among people, and with the steady increase in its consumption worldwide, its market is gradually growing. Globally, in 2019 the size of the wine market was $364 Billion, and by 2027, it is expected to grow with a CAGR of 6% and reach $444.93 Billion, as predicted by Fortune Business Insight.

Though the Covid-19 pandemic has dented its growth to some extent, but experts feel with the reopening of the economy and opening of hospitality venues across the UK, one can expect the demand to recover in the near future.

Let us discuss some wine stocks, that possesses strong fundamental and have been showing positive trend despite the pandemic.

Naked Wines Plc (LON: WINE)

AIM-listed company Naked Wines is an online retailer of wine. The company, founded by Rowan Gormley.

The company reported its full-year results for the period ended 29 March 2021 today, details of which are as follows:

Driven by the shift to online wine purchasing due to Covid-19, the company’s total sales rose 68% to £340.2 million compared to £202.9 million a year ago.

The company has posted strong growth in all three geographical areas, the UK, the US, and Australia. Out of the three areas, the US reported the highest growth in sales numbers, grew 78% to £161.7 million, making it the largest market for Naked Wines Plc, with 48% of the total sales coming from there.
Investment in new customers is up by 113% to £50.0 million compared to £23.5 million last year.

Despite reporting strong financial performance, the shares of the company were trading at GBX 753.00, down by 5.04% as of 12:09 GMT+1, on 11 June. Currently the stock holds a market capitalisation of £580 million.

Stock Spirits Group Plc (LON: STCK)

Stock Spirits is one of the prime spirits and liquor company in Europe. The company owns the portfolio of more than 70 brands of wine, vodka, rum, brandy, and others.

The company’s major markets are in Italy, Poland and the Czech Republic. For FY 2020, all these regions together contributed 90% of the Group's net sales revenue.

In its results for the first half ended 31 March 2021, the company stated:

Poland, which contributes 57% of the group revenue, reported a market share of 30.7% in the crucial vodka category. This is the highest market share achieved in last five years, with revenue up +4.3% and EBITDA up +6.8% on a constant currency basis.
Czech business, which contributes 25% of the group revenue, reported a decline of 13.6% in its revenue and 21.2% in its EBITDA (both on constant currency basis). However as of 31 March 2021, the market share increased from 33.3% to 33.5% in a year on a MAT basis.
Last core segment, Italy (10% of the group revenue) is also up in terms of market share, benefiting from the acquisition of Distilleries Franciacorta in 2019.
Interim dividend of 2.98 € cents per share which was up by 7.6% compared to last year (2020 interim: 2.77 € cents per share).

The shares of the company were trading at GBX 271.50, up by 0.19% as of 12:07 GMT+1, on 11 June.

Diageo Plc (LON: DGE)

FTSE100 constituent Diageo Plc is a British multinational alcohol company with operations in more than 180 countries. A London-based company has popular brands such as Johnnie Walker, Crown Royal, Captain Morgan, Smirnoff under its umbrella.

As per the trading update issued on 12 May:

The company is expecting its organic operating profit to grow with at least 14% in FY2021, which will be slightly more than organic net sales growth.
The company has announced to restart its scheme to return £4.5 billion capital to its shareholders. This was originally announced on 25 July 2019 but got delayed by two years due to COVID-19 and has been extended until 30 June 2024.

The shares of the company were trading at GBX 3454.00 down by 0.09% as of 12:10 GMT+1, on 11 June.

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